A multilateral capital investment to SMEs in Saudi Arabia has been proposed by the Saudi Arabian General Investment Authority (SAGIA), the Venture Capital Bank of Bahrain and the Global Emerging Markets (GEM) investment-operations in New York, London and Paris. The multi-entity investment is a partnership aim to venture-out an “independent” $100 million dollar capital budget to develop opportunity-growth of SMEs. To cite, the opportunity-growth is envisioned to establish the SMEs’ market direction, micro-macro business-economic environment and strategic market-values. (CSCCI, 2008)
SWOT Analysis and general perceptions The Strength, Weakness, Opportunity, Threat (SWOT) analysis depicting in this section of the paper is based upon the initially indicated findings on the current situation of SMEs in Saudi Arabia. Strength One of the indicated strength of the SMEs in Saudi Arabia is its capability to contribute employment of 24. 7%, as indicated by Saudi Industrial Development Fund (SIDF) and the Council of Saudi Chambers of Commerce and Industry (CSCCI). The composition of SMEs to represent 93% of enterprise units is an added strength of capable performance.
In support to this perception, an earlier claim on the performance of SMEs has been cited that 90% of “diverse” business from the small entrepreneurs of public sector basically operates in trade and manufacturing of petroleum by-products that is expected to contribute 50% of local industrial production (Bundagji, 2005). Weakness Like most common issues confronted by SMEs worldwide, the “private volunteerism” to industry development has yet to convey “popular” performance prior to government’s intervention.
The foreign entities recognition to industry-wide participation of the private sector rekindles the Saudi government to focus on human development. The domestic competition on labor skills as attributed by emerging foreign-based companies could weaken the SMEs’ performance relating to technology advancement, in which translated into production output. Opportunity According to SDIF and CSCCI, a clearer vision for SMEs’ growth-opportunities is underway since the guarantee loans schemes would comprehensively address the industry issues pertaining to accelerate the private sector’s initiative.
The comprehensive program is consistent with the financing-support-scheme, subsidies, training and technology innovation, and flexible micro-macro business-policy environment. This “growth-opportunities” could be deduced as referring to “tangible” opportunity for local and international partnership, wherein the abovementioned multilateral capital investments to SMEs can be deduced as “availing” such an opportunity. In which case, the SMEs creation of growth-opportunities could be a continuing “pipeline” or business linkage of investment. Threat
It can be perceived that the prevailing “assimilation” of SMEs to industry-based economy of Saudi Arabia, as a result of comprehensive growth-opportunity scheme, could pave the way for strategic industry-market positioning of foreign investors. The effect of highly competitive domestic production could draw impact to the world economy, considering that Saudi Arabia is a major supplier of petroleum products to the world market. In addition, an “economic glut” may be a phenomenon in the production performance affecting the economic activities, in which when supply is high demand is low, and vice-versa.